Sec. 403. Jurisdiction over crypto asset transactions

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Section 2(c)(2) of the Commodity Exchange Act ( 7 U.S.C. 2(c)(2) ) is amended— in subparagraph (D)(ii)— in subclause (III), in the matter preceding item (aa), by inserting of a commodity, other than a crypto asset, after sale ; by redesignating subclauses

(IV)and

(V)as subclauses

(V)and (VI), respectively; and by inserting after subclause

(III)the following: a contract of sale of a crypto asset that— results in actual delivery within 2 days or such other period as the Commission may determine by rule based upon the typical commercial practice in cash or spot markets for the crypto asset involved; or is executed on or subject to the rules of a registered crypto asset exchange or with a registered futures commission merchant; ; and by adding at the end the following: Subject to sections 6d and 12(e) and section 403 of the Commodity Futures Modernization Act of 2000 ( 7 U.S.C. 27a ) and except as provided in subclauses

(II)and (III), the Commission shall have exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a crypto asset in or affecting interstate commerce, including— ancillary assets that are in compliance with the requirements of section 42 of the Securities Exchange Act of 1934; and all activities relating to a payment stablecoin conducted by an entity registered under this Act, including brokering, trading, and custodial activities relating to payment stablecoins. Subclause

(I)shall not apply to specified periodic reporting requirements made by an issuer that provided the holder of a security with an ancillary asset under section 42(b)(4) of the Securities Exchange Act of 1934 and the security that constitutes an investment contract (within the meaning of section 2(a)(1) of the Securities Act of 1933 ( 15 U.S.C. 77b(a)(1) )) with respect to that ancillary asset. The Commission shall only exercise jurisdiction over an agreement, contract, or transaction involving a contract of sale of a crypto asset that is commercially fungible, which shall not include digital collectibles and other unique crypto assets. Nothing in this subparagraph authorizes the Commission to issue any rule regarding any agreement, contract, or transaction that is not offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in— on or subject to the rules of a registered entity (with the exception of entities required to register under this Act); or by any other entity registered by the Commission. Clause

(i)shall not apply to custodial activities with respect to a crypto asset of an entity supervised or regulated by a State or other Federal regulatory agency. . Section 2(a)(1)(A) of the Commodity Exchange Act ( 7 U.S.C. 2(a)(1)(A) ) is amended, in the first sentence, by striking section 19 of this Act and inserting subsection (c)(2)(F) or section 19 . Section 4d of the Commodity Exchange Act ( 7 U.S.C. 6d ) is amended by adding at the end the following: Each futures commission merchant shall hold customer money, assets, and property in a manner to minimize the customer’s risk of loss of, or unreasonable delay in the access to, the money, assets, and property. A futures commission merchant shall hold the property of a customer of the futures commission merchant with a separate licensed, chartered, or registered entity subject to regulation or supervision by 1 of the following agencies: The Commission. The Securities and Exchange Commission. An appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 )). A State bank supervisor (as defined in that section). An appropriate foreign governmental authority in the home country of the custodian. In this paragraph, the term crypto asset customer means a customer involved in a cash or spot, leveraged, margined, or financed crypto asset transaction, which may include a payment stablecoin, in which the futures commission merchant is acting as the counterparty. A futures commission merchant shall treat and deal with all money, assets, and property of any crypto asset customer received as belonging to the customer. Money, assets, and property of a crypto asset customer described in clause (i)— shall be separately accounted for; and shall not be— commingled with the funds of the futures commission merchant; or used to margin, secure, or guarantee any trades or accounts of any customer or person other than the person for whom the money, assets, or property are held. Notwithstanding subparagraph (B), money, assets, and property of a crypto asset customer may, for the purposes described in subclause (II), be commingled and deposited in the same account or accounts with an entity described in paragraph (1)(B). Notwithstanding subparagraph (B), the share of the money, assets, and property described in subclause

(I)as in the normal course of business is necessary to margin, guarantee, secure, transfer, adjust, or settle a crypto asset transaction with a registered entity may be withdrawn and applied to those purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the crypto asset transaction. Notwithstanding subparagraph (B), in accordance with such terms and conditions as the Commission may prescribe by rule or order, any money, assets, or property of a crypto asset customer may be commingled and deposited in customer accounts with any other money, assets, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the crypto asset customer. Money of a crypto asset customer may be invested— in— obligations of the United States; general obligations of any State or of any political subdivision of a State that are investment-grade; obligations fully guaranteed as to principal and interest by the United States; or any other investment that the Commission may by rule prescribe; and in accordance with such rules and subject to such conditions as the Commission may prescribe. It shall be unlawful for any person, including any derivatives clearing organization or depository institution, that has received any money, assets, or property for deposit in a separate account or accounts as required by subparagraph

(B)to hold, dispose of, or use any of the money, assets, or property that belongs to the depositing futures commission merchant or any person other than the crypto asset customer of the futures commission merchant. A customer shall have the right to waive any requirement under this subsection by affirmatively electing, in writing to the futures commission merchant, to waive the requirement. The Commission may, by rule, establish notice and disclosure requirements, segregation requirements, investment limitations, and other rules relating to the waiving of any requirement under this subsection that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, and any other class of customers. . Section 4d of the Commodity Exchange Act ( 7 U.S.C. 6d ) (as amended by subsection (b)) is amended by adding at the end the following: Prior to conducting trading activity (including routing orders and directed trading) through a decentralized crypto asset exchange, or otherwise providing customer access to a decentralized crypto asset exchange, a futures commission merchant shall implement risk management standards with respect to trading activity through that decentralized crypto asset exchange. A futures commission merchant shall— implement an effective risk-based procedure for determining whether to execute, reject, or suspend an incoming or outgoing transaction relating to a decentralized crypto asset exchange, including a determination based on suspected money laundering, sanctions evasion, fraud, or market manipulation; conduct an effective risk-based analysis of the code of the decentralized crypto asset exchange to determine whether crypto asset transactions can occur on the exchange securely, consistently, and immutably; verify that the code for the decentralized crypto asset exchange is widely available to the public; verify that there are appropriate developer documents relating to the decentralized crypto asset exchange that appropriately disclose all risks of the software; conduct an effective risk analysis with respect to the decentralized crypto asset exchange, including— money laundering and sanctions evasion; settlement; fraud and market manipulation; and operational and cybersecurity risk, including— the use of multi-signature wallets; integration with third-party software or vendors; any material efforts to alter the functionality of the protocol; and all other material risks; implement robust policies and procedures to mitigate the risks identified in subparagraph (E); disclose the risks identified in subparagraph

(E)using plain language to customers; maintain robust capability to detect market manipulation, fraud, money laundering, and sanctions evasion occurring on the decentralized crypto asset exchange, including through the use of tools that will properly target those risks, including through distributed ledger intelligence companies; ensure that the merchant is not trading with a decentralized crypto asset exchange on a principal basis, but solely on an agency basis at the request of a customer; and consistent with this subsection, implement other standards the Commission may require by rule. The Commission shall adopt risk management standards relating to money laundering, customer identification and sanctions for self-hosted wallets that conduct transactions with a futures commission merchant. In this subsection, the term self-hosted wallet means a digital interface used to secure and transfer crypto assets, in which the owner of the assets retains independent control in a manner that is secured by that interface. . A registered futures commission merchant shall not act as a counterparty in any agreement, contract, or transaction involving a crypto asset that has not been listed for trading on a registered crypto asset exchange. The Commission may require a registered futures commission merchant to comply with other standards of section 5i, including the core principles described in that section, if appropriate based on the activities and risk profile of the merchant. . Section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ) is amended— in subsection (a)(1), by striking 5(d) and 5b(c)(2) and inserting 5(d), 5b(c)(2), and 5i(c) ; in subsection (b), by inserting registered crypto asset exchange, before derivatives each place it appears; and in subsection (c)— in paragraph (2), by inserting or participants before (in a ; in paragraph (4)(B), by striking 1a(10) and inserting 1a(9) ; and in paragraph (5), by adding at the end the following: In the case of a listing for trading a crypto asset that has not previously been listed for trading on another registered entity— paragraphs

(2)and

(3)shall apply as if the listing were a rule; and paragraph

(2)shall be applied by substituting 20 business days for 10 business days . During the 18-month period beginning on the date of the registration of the first crypto asset exchange, the Commission shall have an additional 20 business days to review any certification under clause (i). In conducting a review under clause (i), the Commission shall consider any comments provided by the Securities and Exchange Commission with respect to the legal classification of a crypto asset. .

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7 USC 7a–2

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Sec. 403

Jurisdiction over crypto asset transactions

Cite7 USC 7a–2

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